Regulatory Governance for Development and Growth : Malaysia's Experience with Good Regulatory Practices

Good Regulatory Practices (GRP) are a systematic application of tools, institutions, and procedures that governments can mobilize to ensure that regulatory outcomes are effective, transparent, inclusive, and sustained. Adopting GRP can improve the regulatory environment and produce better conditions for sustainable growth and investment.

Although relatively recent, Malaysia’s experience with GRP has provided remarkable results. Malaysia has demonstrated that more business-friendly regulations and a more favorable regulatory environment can contribute to economic growth and investment.

Key Findings

Malaysia’s GRP journey is characterized by several noteworthy features that include:

1. Involvement of the private sector through a high-level task force known as PEMUDAH, with great success documented both by the process and the outcomes.
2. Creation of a comprehensive institutional ecosystem supporting the adoption of GRP, which enabled meticulous implementation of various aspects of the reforms.
3. A long-term development vision, as well as the medium-term national development plans, which have included GRP commitments for the last few decades. This provided high-level support and continuity to this agenda.
4. Shifting from a deregulatory approach to regulatory reform, toward a complementary focus on regulatory quality.
5. The establishment and implementation of GRP provisions and requirements in Malaysia’s Regulatory Policy have projected the country to a position comparable to high-income OECD countries, as reflected by international indicators.

Recommendations

Malaysia’s GRP journey has many lessons for countries embarking on similar reforms. On the way forward, the following recommendations can strengthen the country’s trajectory to better regulation:

• Establish formal and legally binding requirements for regulators to adopt GRP.
• Create effective regulatory oversight functions that allow to “challenge” regulation that do not comply with GRP requirements.
• Develop and apply a formal monitoring and evaluation framework to assess the implementation of the country’s Regulatory Policy.
• Provide clearer definitions and requirements on some of the GRP building blocks, including regulatory impact assessment, forward planning, review of existing regulation and government coordination.
• Continue efforts to apply GRP at the sector and subnational levels.
• Improve regulatory agencies’ awareness of GRP and its importance.